I have had no time to write lately, but I really want to change that, starting today.

What’s that? Something about Europe? Enh, too complicated. I need to ease my way back into blogging with something simple, like explaining why I think two Bloomberg writers and one Duke University Finance Professor are confused.

Suppose you and I enter into an inflation swap contract where you offer to pay me $1.10 five years from now, while I offer to pay you CPIthen / CPInow dollars. It is true that one of us is offering a fixed [...]

I have added some new links to the sidebar so we can all watch the cascade of Eurozone defaults with our own eyes. Well, until the adults step in and put a stop to it, anyway. (RSS readers will have to click through to see the sidebar, of course.)

Exotic option hedging contributed to the flattening of the Treasury curve today.

Recall that a “flattening” yield curve means that the spread between yields on shorter maturities and longer maturities declines. Like in this picture from Bloomberg (orange = yesterday, green = today):

As you may have noticed, in the past few weeks stocks are down, gold is down, oil is down… And Treasury yields are also down. (So much for my “bond crash”.) It sure smells like the market is pricing in a little deflation or disinflation or something. But how can we be sure? I mean, [...]

People stop me on the street all the time and say, “Hey there, Nemo. Where do you get all this stuff? Did you read a book or something?” And I say no, of course not, who reads books anymore? Besides, you do not have to read anything to state the obvious.